This article is a sponsored feature from Mining.com.au partner Aurora Energy Metals Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
“Sometimes it’s just serendipity that presents you with a competitive advantage and in our case, we benefit from infrastructure that was established to support a relatively small but significant mining industry that lasted some 75 years.”
Aurora Energy Metals (ASX:1AE) is advancing its flagship Aurora Energy Metals Project (AEMP) in south-eastern Oregon in the US.
Managing Director Greg Cochran and his team are taking advantage of certain opportunities that are beneficial to its Aurora Project. However, he acknowledges that some of these opportunities arose via serendipity, but the pathway to development is paved with hard work and sound strategic planning.
With over 30 years’ experience in international technical and commercial roles and plenty of skin in the game with uranium, Cochran knows better than most that by not capitalising on such opportunities is tantamount to failure.
He says unique features of AEMP range from the scale of the asset to its proximity to important infrastructure in a ‘uranium friendly’ mining jurisdiction. The MD tells Mining.com.au that although Aurora has proven lithium is present in overlying sediments by recent drilling – “the reality is we are 100% focused on our uranium project”.
“After all, it is a very well-defined resource and is actually the largest mineable, measured and indicated uranium deposit in the USA”
“After all, it is a very well-defined resource and is actually the largest mineable, measured and indicated uranium deposit in the USA.”
The AEMP Mineral Resource Estimate (MRE) currently stands at 107.3 million tonnes @ 214 parts per million U3O8 for 50.6 million pounds U3O8 with a shallow ‘high-grade’ core of 18Mt @ 485ppm U3O8 for 19.2Mlbs U3O8.
Aurora is one of a handful Australian ASX-listed uranium explorers operating in the US, but its project has the largest mineable, measured and indicated uranium resource amongst them.
The company is in the midst of a multi-phase program targeting the completion of uranium feasibility studies and advancing permitting to de-risk its advanced stage project.
Cochran notes they’re assessing ways to accelerate the Scoping Study, which just commenced with a metallurgical testwork program that is projected to be completed by year-end. Depending on that outcome, a Prefeasibility Study (PFS) is planned to be completed during 2024. However, expanding the scope of the current study means a PFS could potentially be wrapped up earlier.
The company’s environmental consultants have commenced their engagement with the Bureau of Land Management (BLM) in Oregon to compile an Exploration Plan of Operations (EPO). This is an important step as it defines what baseline studies, such as environmental and cultural studies, must be undertaken. These studies also lay a foundation for a future mine operating permit, which is why it is seen as an important de-risking step.
DRA Global, an ASX-listed international engineering firm with excellent uranium experience, has been engaged to manage the metallurgical testwork program. The testwork will enable the development of the flowsheet, which is currently at the concept level, whilst different transport methods to get the ore from the open pit to plant will also be assessed. Cochran is adamant that they can avoid trucking and can rather rely on conveying or pumping, which would take advantage of the hydroelectricity power line that feeds a substation close to where the plant is planned to be located, on private land in Nevada.
With a clear pathway to development front of mind, Cochran and his team are thinking well ahead in terms of when to commence discussions with potential strategic offtake partners (should it take that route) and prospective financiers.
“We see the Scoping Study as the trigger for that engagement. I have started to put out feelers, but all I want to achieve in the next 5 or 6 months or so whilst we’re doing the Scoping study is to introduce ourselves to some US utilities. In addition to that, I want to start introducing ourselves to people at the federal level of politics in the US, as we have already done at the state level in Oregon.”
The MD says with such engagement the important messages to be conveyed are about the Project’s scale, advanced status and Aurora’s development strategy.
“Now is not the time for us to be raising our hand for the sort of loan funding that some other ASX companies have already successfully obtained, it’s premature”
“Now is not the time for us to be raising our hand for the sort of loan funding that some other ASX companies have already successfully obtained, it’s premature. We aren’t at that stage, but we’re going to at least be opening the door to introduce ourselves, as step one, and once the Scoping Study is out, we hope those conversations will become more serious.”
Cochran and the company’s board all have extensive experience in progressing projects through the various development phases. Cochran also has a lot of uranium experience, having managed the Australia-Asia portfolio for Uranium One & also having been MD at Deep Yellow for almost six years.
Serendipity – a natural electrical phenomenon
The AEMP is located in Oregon, a location that has significant infrastructure in place that will help facilitate development. With the world’s largest nuclear power fleet and a lack of domestic uranium production, Aurora is well placed to become a local supplier of choice to the US.
The MD says the fundamental strengths of the project itself is a well-defined resource, low geological risk, existing infrastructure, including hydroelectricity (which means clean, green, cost effective and reliable power), existing sealed and unsealed roads, and a small town nearby which is on a major interstate route.
It also has favourable, gently undulating topography and a mild climate by US standards.
“So immediately one sees this opportunity that thanks to a little serendipity we have the potential to deliver green uranium. And it’s one of the best opportunities out there given the inherent competitive advantages.
Sometimes it’s just serendipity that presents you with a competitive advantage and in our case, we benefit from infrastructure that was established to support a relatively small but significant mining industry that lasted some 75 years.”
“Sometimes it’s just serendipity that presents you with a competitive advantage…”
At the crux of it, the company has what it calls “a clear pathway to development”.
Aurora believes that the optimal way forward is to mine in Oregon and process in Nevada. Nevada is preferred because it is acknowledged as a leading mining jurisdiction.
Cochran says: “But we’ve gone even better than just being in Nevada –we’re on private land, less than 10 kilometres from the deposit, which is known to be a distinct advantage.”
He adds that operating in this part of North America, Aurora can tap into a community that was developed in a mining environment. He says in such a mining territory, locals that live in the community, as well as on the nearby reservation, are no strangers to the sector – “many of them work in mines further away”.
Unlike many FIFO mining operations in Australia, if Aurora develops this project then people can return to the wider McDermitt community and will not have work away from home for days or sometimes even weeks at a time.
He reiterates that the US is ‘uranium friendly’, borne out of the nation’s widespread acceptance of nuclear power. A recent poll shows public support approaching 80% – the highest it’s ever been.
The US is also almost entirely reliant on uranium imports to supply its large reactor fleet, which supply half of the country’s clean energy. Last year, almost half of the country’s uranium came from former eastern bloc countries.
Cochran adds: “By comparison, many Australians and left leaning politicians naively believe that we do not need nuclear power for our energy security and to achieve our climate goals. Poorly scoped, or perhaps even biased public research perpetuates this myth and as a result the industry frankly gets messed around here to serve very short-term political goals, with no foundation in science or fact. Just look at WA and Queensland Labor, which banned uranium mining when they came into power which is in direct conflict with federal Labor’s policy.”
There seems to be evidence that the market is becoming more stressed and we saw that during the June quarter there was an increase in buying activity from US utilities, as well as financial speculators, with several making new forays into the market.
At the same time, the uranium market continued to strengthen during Q2 2023, with the spot price increasing from US$50.35 per pound to US$56.20/lb, peaking at US$57.75/lb.
In June, the World Nuclear Fuels Market held its 49th Annual Meeting and International Conference in Ljubljana, Slovenia, somewhat appropriately themed – ‘Mind the Gap’. The theme acknowledged how changes in the global energy landscape over the past few years, driven by geopolitical uncertainty, a demand for greater accountability for net-zero targets and energy crises experienced in various parts of the world due to failed energy policies, are having a significant effect on supply and demand across the nuclear fuel cycle.
Cochran says for Aurora, this highlights the importance of putting feelers out with utilities early and to develop a better understanding of that market.
“When it comes to US utilities, the buyers historically have not necessarily been uranium miners’ friends and that’s not a criticism.
They’re good at what they do and they had a choice of where they could source their uranium from. And during the previous boom leading up to 2007 there was real upward pressure on the uranium price – they were caught somewhat off guard by various supply-related issues and so over-contracted.
If you think about it in mining terms, uranium is just a reagent to fuel your nuclear plant but of course it’s an absolutely essential reagent because without it you can’t operate. So, buyers diversify their risk by diversifying their sources of supply as well as the nature of their contracts, by varying the volume, the price, the delivery schedule and the length of the contract.
Uranium offtake contracts can be quite complex but it is a well-honed process. That being said, it is estimated that as much as 25% of US demand over the next 10 years remains uncovered and therefore the nature of offtake contracts is changing.”
Uranium bull run
According to the US Energy Information Administration (EIA), the vast majority of uranium delivered in the US in 2021 and 2022 was of foreign origin. Uranium inventory held by US brokers and traders continues to grow and the Sprott Uranium Fund now holds about 65 million pounds of uranium.
Cochran says amid this backdrop the uranium price continues on a gradual upward trajectory.
“Today we’re in what has been labelled as the uranium market’s third bull run, which is a result of the need for greater energy security and to address climate change. Under investment in uranium production capacity, mothballing of existing capacity, inflationary pressures and the Russia-Ukraine war have caused a large uranium shortfall, which is growing every year.
“Today we’re in what has been labelled as the uranium market’s third bull run…”
The production shortfall started to grow after operational (and investment) cutbacks were made post Fukushima. However, demand also declined for a while and we saw inventories increase dramatically, but that has been turned around by the factors I mentioned earlier, and of course the entry into the market of funds holding physical uranium.”
While the US is a world leader in nuclear energy and could be looking to triple nuclear capacity by 2050 there hasn’t been a nuclear reactor built in the region for some time.
Cochran says that Assistant Secretary of the DOE’s Office of Nuclear Energy Kathryn Huff has certainly alluded to a need for at least the doubling of capacity to achieve the country’s clean energy goals. To this end, the US has mobilised a large amount of funding – importantly with bipartisan support – to achieve these goals.
“Actually the good news is that Vogtle 3 has just started generating electricity for its customers in Georgia, the first large reactor to be commissioned in 3 decades, and Vogtle 4 is going through its final trials so it will soon be in action as well. They’re 1,100MW reactors and will operate cleanly, safely, and sustainably for the next 60 to 80 years.
As far as uranium mining, the US lost its leading position in the 1980s and has in fact produced very little uranium over the past 5 or 10 years. However, just like lithium and other battery minerals, the US urgently wants to establish a reliable domestic uranium supply backed up with greater involvement in the rest of the nuclear supply chain as well.
“That is a perfect storm for aspiring producers like Aurora, especially because we have a very large, well defined uranium resource with access to infrastructure”
That is a perfect storm for aspiring producers like Aurora, especially because we have a very large, well defined uranium resource with access to infrastructure.”
It seems that Aurora is sailing ahead nicely and navigating its way toward development.
Cochran reiterates that globally, the US is the largest uranium market due to having the world’s largest nuclear fleet, which is likely to continue until the anticipated crossover point with China, currently forecast for about 2030.
Yet the key issue remains the responsible mining of uranium to meet a significant percentage of the USA’s requirements, which means the mines that need to come online must have scale.
“Historically, hundreds of small operations mined uranium ore in the US and trucked it to the nearest plant, which left massive environmental legacies. Clearly, uranium must be mined responsibly and that requires scale. ISR operations can be smaller, but a conventional open pit operation needs to be of scale to carry your overheads. I’d suggest one million pounds per annum is the absolute minimum.”
Aurora’s gathering momentum
During the June quarter, DRA Global was appointed for the next phase of testwork and Aurora also advanced permitting-related and other project activities. A $2.7 million placement was also undertaken with funds to be used to complete metallurgical testwork and the Scoping Study.
The company is consulting widely on technical and permitting matters to obtain guidance on how best to take the project forward, which includes all the aspects one would expect such as mining, processing and the assessment of different ore transport methods from the open pit to plant. Permitting is also key to de-risking the project and the scoping of the so-called exploration plan of operations is well advanced.
“We’re still sticking to our goal of wrapping up a PFS by the end of next year – the end of 2024″
“We’re still sticking to our goal of wrapping up a PFS by the end of next year – the end of 2024. But if we broaden our scope of what we’re doing now, that may alleviate some of the pressure on the PFS.”
In closing, Cochran was asked about the company’s plans to address its lithium prospectivity. He agreed that it is a somewhat unique feature of the AEMP that it has two attractive minerals in different geological horizons. The uranium mineralisation is generally hosted in the volcanics, whilst the overlying and surrounding lakebed sediments have been shown from recent drilling to contain lithium.
Aurora is totally focused on its uranium as it is such a compelling story, however it will consider allowing a credible partner to fund lithium exploration on its claims to advance that component of the Company’s overall potential.
Write to Adam Orlando at Mining.com.au
Images: Aurora Energy Metals